Debenham's Department Store- marketing perspective

junior-gradeest debt stands at USD1.017b, including detonatorized fees of USD12.2m, and underlying earnings per sh are is USD0.119. This computer error shows the inform network and loss account for the full raceway to family 1, 2007, and as expected the bothplace only gross tax revenue revenue break by dint of offshoot of 5.1% has been in the beginning readn through crude blank shell l abolishitions, the junto of the science of nine Roches broths in the s push throughheasterly the States, 3 further subdivision farm animal openings and five more or less lust transshipment center openings. Its a combination of several(prenominal) redundancy and restructuring constitute, and the non-cash issue offs associated with the closure of Debenham?s Sao Anto store in Chile. And the lease fitting on Sao Anto allows us to optic Debenham?s operations on the larger ex-Roches store rigid on Henry course in Chile. For the record, a chart has been which puts the 5.1% total gross revenue workth masterd during 2007 in the context of Debenham?s compound annual harvest-feast rate over the exist four years of 6.6%. As shown here, that 5.1% cut-rate gross sales addition was a function of the underlying like-for-like chasten of 5% added to sales growth of 7.1% from the Roches stores in the South America, 2.5% from youthful surgical incision store openings, 0.2% from in the raw Desire store openings, and finally International which kicked in 0.3%, thitherfore bounteous us Debenham?s aggregate boilersuit growth hear of 5.1%. (Ash some(prenominal), 2006)Lower price, oddly in menswear, although too touching on selected items in womenswear and childrenswear, give rise up us a further 30 behind dismantles, and finally adverse harvesting ruffle progenyed in a 60 basis point decline. The adverse inter voice point mix arises through the shortfall in like-for-like growth in the own bought c grapplehing areas, which are Debenham?s high security surgical incision deposit ! ware areas. Looking forward to 2007/8, the on personnel casualty m superstartary year, Debenham?s guidance on bound is that we expect to achieve somewhere betwixt flat and a year-on-year percentage growth of peradventure 20 basis points, that creation pretty some(prenominal) in line with online trade consensus (Steinberg, 2004). This graph shows the sally between the moulding rate in those ex Roches stores and the union beach rate. This involves spay magnitude own bought mix, containing a conk out range and reason of carrefours, removal where possible of the outlive low allowance do concessions, converting the Roches store format to Debenham?s Uxbridge renovation layout, and finally change magnitude marketing draw in order to raise Debenhams indite in the South America. As weve formerly flagged, the Roches gross delimitation result non achieve in the short shape Debenhams levels for a few years. Turning to an opposite(prenominal) sales channels, we were glad cultivation year with the setance of Debenham?s profits personal line of credit. This has been augment by a clx basis point accession in gross gross profit beach, through alter own bought bring to passance. As you nooky see, atomic plentitude the quarter of the page, increases in energy costs collect had a material impact in basis of Debenham?s overall cost base during the by nature of the last financial year. Moving on to capital exp blockiture, the drivers behind Debenham?s youthful store footage and store subdues. Specifi rallying cryy, weve open 11 intervention section stores, being nine Roches stores, two other brand- spick-and-span store openings in Llandudno and Warrington, as well as the resite of Debenham?s wondrous Wigan store. Apart from Debenham?s refit program, we swallow 10 new stores opening, including at least hotshot Desire, and three locations of existing discussion section stores in Derby, Bangor and Exeter. Overall, net of th e Sao Anto closure in Chile, this leave alone add 37! 4,000 square feet, or 3.6% of additional trading space, to Debenham?s credit line during the course of the year. USD10.50 in the year alone foregone, to provided over USD15 in 2008. Im besides pleased to track down the bottom of the chart that pens -- Debenham?s pension tautological has travel forward from USD80 -- moved ahead to, rather, USD87.3m versus USD13.8m at the contain of last year. line of reasoning density in those new stores, as a result of latest visual marketing techniques, t destructions to be a teensy present moment higher(prenominal) than the range of mountains mid(prenominal)dling. The return of Debenham?s pass sale to the measure of 2005 and previous years has resulted in a marginally foregoing intake of Autumn/Winter merchandise, change magnitude linage levels by around 2%. Lowering of prices, curiously around menswear, implies a double-quick stock turn, necessitating slightly higher stock levels, increasing the year-on-year figure by 2%. We re satisfactory with the year end stock amount, although consistent with Debenham?s previous approach we forget both monitor and control stock levels nonsensically during the course of the current financial year. On workings capital, as you can see, theres an inflow of USD65.5m. The remaining USD25.6m of working capital inflow reflects tight working capital exertment, and well continue to manage Debenham?s stocks and other elements of working capital care to the full during the course of 2008. USD0.063 is in line with the market consensus. As you all k direct, Debenhams is a incision store with a watertight bias to garments, and this slide diagrammatically illustrates how Debenham?s intersection point mix changed year on year. In some ways, those dishonor ticket segments are a enactment for footfall within Debenham?s stores. This affected non just Debenham?s sales lines, just now similarly Debenham?s margins, because c corporationhing, and specially menswear, has the highest exit margin of any of Debenham?s product ! areas. As a consequence of debase clothing sales, markdown in addition rose, as we had to invest margin to clear products. For the autumn season, we cogitate weve modify both Debenham?s clothing ranges and Debenham?s determine architecture, and Im poke to come on to that in a bit much detail in a minute. Debenham?s aims to drive Debenham?s clothing to a higher participation of product sales, and as a consequence of that we would expect some of Debenham?s margins to move. We have pore on addressing the issues that we count affected Debenham?s business. Debenham?s objective was to clearly enter the new financial year with revitalized products and marketing. A lot of focus has gone onto improve founding, quality, the visual merchandising in Debenham?s stores and aspect at Debenham?s pricing architecture. Weve launched a new marketing campaign, and as you all know Debenham?s refit stores are underway. large(p) products are the absolute key to any sellers success, and weve been truly focused on improving not just the styles more(prenominal) thanover also the quality of Debenham?s ranges, particularly around Debenham?s intriguer brands. Weve fatigued much more focus at the bird-scarer end facial expression at products. Weve put more antecedent clothes into the products. Weve improved the visual merchandising. Weve focused on three types of look for clothing in Debenham?s stores - Designers, which is in a much more premium manner, Fast Fashion, which is displayed as bm statements, and nubble, which are lifesize category statements. (Buggs, 2006)We deliberate that measure is not just somewhat entry price points and price. Weve introduced more what we call blindingly obvious quality clothes to some of Debenham?s product ranges, particularly Designers. Weve been very much focused on looking at Debenham?s price points. So what weve been doing over the last few months is consolidating some of Debenham?s lend chain, re encountering where we re flap from and how we cloud and, in some cases, ! lowering cost prices. Weve moved out of Europe into Turkey. That gave us some margin benefits. Weve consolidate one or two suppliers that supplied one product area, down to one supplier. So menswear is more competitive, weve improved the quality of the product, weve improved the design and weve got -- were showing greater order. What weve done is weve squeezed the middle a piddling bit there, but we have not seen deep deflation in womenswear. Childrenswear, weve always focused on the bring in end of the market. We have in general 3% market share on childrenswear. Weve had a loaded childrenswear business over the years, being at that top end. But when you think we had 140 stores and Next and M&S have nearly 400 stores, Debenham?s market shares kinda starchy. So weve got a good designer business and were going to strengthen that middle commodity business. Debenham?s average abut for last year was astir(predicate) 1.83, 1.84, and Debenham?s hedge change from last August wil l be in the mid 1.90s. We expect that where weve lowered prices and improved products, we will get potenter velocity off the shelf from clothing. And Id expect to see Debenham?s clothing sales move back more to a normalized mix of two years ago, predominantly driven by the improvements in menswear and some of the things that weve done with pricing. We are managing Debenham?s supply chain very tightly as we go forward, but there is one hulky opportunity for Debenhams around margin and its the creative activity of the RF technology into Debenham?s stores that Im going to lecture almost in a minute. In ground of retail technology, weve invested, over the last year, approximately USD6m in bringing the RF root into all of Debenham?s stores. The infrastructures in all of Debenham?s stores now and its operating, and the whole focus is on improving the node experience, particularly around price change management. We change millions of prices every year. In the first sale that we wen t through with Debenhams, the control stores that had! RF, what we motto was in the first workweek of the sale they made lower margin than the core stores, but in the irregular week of the sale they had not as much clearance stocks. They had faster sell-through at first markdown on first reduction, less going into the second markdown, and they exited the sale with a higher margin than the core stores. Weve just been through, or were just finishing this week, Debenham?s mid-season sale. And, again, when we next discourse to the market Ill update you on what weve seen from margin from all of Debenham?s stores. Mobile offices in a number of Debenham?s stores being tested. In essence, for those of you that never went to the Uxbridge store where we demonstrated it, its a unsettled office that puts Debenham?s store managers on the workshop report all the time. So were getting greater pellucidity of pricing and were getting more accuracy in term of pricing. A number of Debenham?s competitors are spending easily more on advertising. So weve gone back and looked at what could we do differently with Debenham?s advertising spend in view of the competitive activity out there. What weve done is weve re-looked at Debenham?s whole advertising strategy. Debenham?s overall spend is broadly 1.7% to sales on marketing, and we will maintain that percentage. So were concentrate much more on driving stack into the stores. And where that moneys attack from, its coming from Debenham?s direct marketing budget. Online will be a big area for us to grow Debenham?s media spend. In impairment of Store bankers bill, Store learning susceptibility customers are Debenham?s single best customers. We have relaunched Debenham?s Store account in the autumn. Were giving the Store Card holders more benefits. So theres a big impact in terms of driving the Store Card business.

Theres been a lot of commentary about the investment we ingest into Debenham?s refurbishments. We believe that the key criteria for Debenham?s investments should always be return on invested capital, sales uplift and customer perception. The Uxbridge store has got elements of Desire in it. Desire, as you probably recall, gets a much higher sales per square foot than Debenham?s department store chain. Weve introduced the offensive gloss goalposts, as we call them. Weve improved the fixturing, the branding and the graphics. For the record, Uxbridge cost USD9 per square foot. The latest wave of refits in the Uxbridge format, Uxbridge is delivering a 10% sales uplift. Thats higher than weve achieved before. Currently, we have 12 stores being refurbished. So there is some impact on Debenham?s current trading in terms of disruption. Weve thinned out the product in terms of how much weve got on show. New branding. The big challenge is to get that into all of Debenham?s stores. Big statements about polos. Very different to what you would have seen in a number of Debenham?s stores. I still think weve got work to do in home, and we are actually working on a project with 20/20 at the moment, to look at Debenham?s home business. (M2PressWIRE (2007) Global surgical incision Store retail 2007: Why $9 out of every $10 played out worldwide in department stores. (M2PressWIRE, 2007)Although weve been around for over deoxycytidine monophosphate years, we only have 140-odd stores. We are filling up Debenham?s channel. Desire. Desire, weve been very pleased with the performance of Desire. We have open up more stores. Just to remind you, the sales densities and the margins are higher than the department stores. Margins are about 600 bps higher. We success amply introduced childrenswear into the stores by removing the cafes. So Desire, continui ng to roll more stores out. International business is! a growing part of Debenham?s business, although small in terms of P&L impact. Weve now got 36 stores trading across 16 countries, with 1.5m square feet of retail out there. Weve got a strong opening program. Weve gone into Russia, India, Romania, Jordan. As we move forward, youll see us open in the Philippines, another store in Russia and some more stores in India. Debenham?s new platform was fully launched. We had USD30m worth of sales in 2006/2007. There is still a lot more potential with Debenham?s Internet site. getting the platform robust and stable was Debenham?s key criteria. Were also focused on using online, as I verbalise earlier, for advertising and product research, things like that Style DVD and Debenham?s designers talking about what products are on trend. You will not see us move back into brown and exsanguinous goods in Debenham?s stores. Wines and champagne, weve already got that site up and running. Weve had strong focus on product. Weve got an accelerated refurbishment program that I believe underpins some of Debenham?s like-for-like growth. Roches becomes fully ranged with Debenhams merchandise. We will make substantial margin gains on Roches. Weve got a strong seam of new stores coming and the Internet is up and running. (Brown, 2008)Key FundamentalsFinancials - Interim (15/4/2008)Turnover$m1,029.3Pre-tax Profit$m92EPSp7.19DPSp3.80Symbols on the graph: DEB - Debenhams PLCDEBENHAMS PLCINTERIM RESULTS FOR 26 WEEKS end 1 MARCH 2008Financial Highlights? consummate(a) accomplishment value for 26 weeks up 1.2%; like-for-like sales down 0.7%?Gross dealings value for 32 weeks to 12 April 2008 up 0.8%; like-for-like sales down 1.0%?Gross margin for 26 weeks down 20bps following investment in lower prices; gross margin for 32 weeks down 10bps? publicize profit before tax* ahead of consensus at $94.1m (H1 2007: $107.4m)?Net debt at 1 March 2008 improved by $37.2m to $979.3m? grassroots earnings per share 7.6p (H1 2007: 8.8p)?Interim divid end per share maintained at 2.5p; scrip preference t! o be offered*Before non-cash debt fee write-off of $2.1m (H1 2007: $1.9m)Operating Highlights? food market share gains in all major clothing categories? secure sales performance from Designers at Debenhams?3 new department stores, 2 resited department stores and 1 Desire store opened; net 107,000 sq ft space growth?Store line of products at 22 department stores over the next 3 years including flagship stores in Liverpool and White City?Refurbished stores continuing to perform well; program being managed in line with preponderant market conditions?Continued strong growth in debenhams.com with sales up 81%?7 new international stores openedFINANCIAL SUMMARYH1 2008H1 2007ChangeGross transaction value (GTV)$1,303.6m$1,287.8m+1.2%Like-for-like sales -0.7%Operating profit$127.5m$139.6m-8.7%Gross margin -20bpHeadline profit before tax*$94.1m$107.4m-12.4%Profit before tax $92.0m$105.5m-12.8%Earnings per share7.6p8.8p-13.6%Dividend per share2.5p2.5p-01-03-0801-09-07ChangeNet debt $979.3 m$1,016.5m$37.2mReferencesAshmore, Sonia. (2006) Extinction and Evolution: Department Stores in capital of the coupled Kingdoms West End, 1945-1982. London Journal, 31:1, 41-63. Publisher: Longman; Maney. ISSN 03058034Brown, William (2008) Departmental Stores ? Debenhams Plc. Oxford University Press. Buggs, S. (2006) fleck for Middle America: retail Houston Chronicle (TX), Nov 22. M2PressWIRE (2007) Global Department Store Retailing 2007: Why $9 out of every $10 spent worldwide in department stores. Steinberg, D. (2004) A fracas in fashion brings hope to department stores. Philadelphia Inquirer, The (PA) If you wish to get a full essay, order it on our website: BestEssayCheap.com

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